1. Understanding Rollovers
Joe Baumgartner, CFA
Investment Solutions Consultant
New York Life
New York Life Insurance Company, its affiliates and its financial professionals do not provide tax, legal, or accounting advice. Please consult with your professional advisors for information regarding your personal situation. This seminar and insurance sales presentation is for informational purposes only (Exp. 12/31/18)

2. Rollover Defined
A rollover occurs when a client/prospect withdraws cash or other assets from one eligible retirement plan and contributes all or part of it, within 60 days, to another eligible retirement plan.
Old 401(k)
New IRA

3. Know your options Take your distribution in cash
Leave your retirement savings in your current plan (to the extent permitted by the plan)
Rollover your retirement savings to your new employer’s plan (to the extent permitted by the plan)
Rollover your retirement savings directly to an IRA
So what are your retirement plan distribution options? You can take your distribution in cash, leave your retirement savings in your current plan, roll it over to your new employer’s plan, or roll it directly to an IRA. Let’s take a closer look at each of these distribution options.

4. Take your distribution in cash
Advantages
Immediate, unrestricted use of your retirement savings
Individuals born prior to January 1, 1936 may be eligible for special tax treatment
Disadvantages
10% premature distribution penalty tax (if under age 59½)1
Will have to pay federal and possibly state and local income taxes (At least 20% is immediately withheld for taxes)
A distribution may move you to a higher tax bracket
For most investments, savings no longer grow tax- deferred
Your first option is to take your distribution in cash. Having immediate, unrestricted use of your retirement savings may seem like an advantage. In addition, individuals born prior to January 1, 1936 may be eligible for special tax treatment. However, before taking your retirement plan as a cash distribution, give careful consideration to the consequences of this option. While it may seem tempting, I think everyone will agree that their retirement savings is generally intended for long-term financial goals.
If you are younger than 59 ½, in addition to income taxes, you may also be required to pay a 10% premature distribution penalty tax. There are certain exceptions such as deductible medical expenses, disability, or separation from service after age 55.
Everyone must pay the income taxes that were previously deferred. These include federal and may include state and local taxes on the pre-tax contributions, as well as any earnings. Be aware that 20% of the distribution will be immediately withheld for federal taxes, and you may have state or local taxes immediately withheld as well.
You should also keep in mind that you will be paying income taxes on your distribution, and the rest of your income, at a specified tax bracket. The distribution itself can actually raise your tax bracket. This means that you will owe a higher percentage of tax not only on the distribution, but also on the rest of your income. Please consult with your tax advisor.
The total tax can amount to more than you would think. To help you better understand how devastating this could be to your retirement plan and your future, let’s take a look at a specific example.
1. Unless certain conditions are met

5. You could lose nearly half your savings to taxes
Karen's projected income and penalty tax liability:
Distribution $50,000
10% early withdrawal penalty tax (5,000)
Federal Income tax (14,000)
State income tax (2,500)
Net distribution after the penalty tax & taxes $28,500
Let’s consider the situation of a hypothetical investor we’ll call Karen. Karen is 35 years old and has just accepted a new position at the XYZ Company. She has accumulated $50,000 in her former employer’s 401(k) plan, and she decides to take a lump sum distribution in cash.
First we need to differentiate between withholding and income tax, because there is a difference. Withholding refers to a portion of an employee's tax liability paid directly to the government by the employer. Income tax is a tax levied on a person's income.
Next, we need to understand 401(K) distribution guidelines: when a person takes a distribution paid directly to them from their 401(K), the IRS requires the custodian to withhold 20% of the distribution amount. This 20% will be sent to the IRS and applied to the taxes owed at tax time. The 20% MUST be withheld at the time of distribution (different from an IRA). In addition, if a state requires mandatory withholding, the custodian must withhold that amount as well. For example, the state of Virginia requires custodians to withhold 4% at the time of distribution. Therefore, the withholding amount for a participant who lives in the state of Virginia must be 24%. However, the treatment of state taxes varies from state to state, so you should consult with your tax advisor to determine if a state tax withholding is required for your state. Not all states require mandatory withholding.
Here is what we know about Karen's Income and penalty tax situation: Because Karen is under the age of 59 ½. and does not qualify for any special exceptions, she incurs a 10% early withdrawal penalty tax on the entire distribution. The 10% penalty tax is owed to the IRS in addition to any income taxes owed. Income is taxed at the person's income tax rate (generally between %. Consult a tax advisor for specific tax guidance). Lastly, the participant may or may not owe state taxes, depending on the state.
Therefore, Karen's employer is required to immediately withhold 20% of her $50,000 distribution to cover her federal income tax burden. ($10,000, to satisfy the mandatory withholding rule), She may be subject to state withholdings as well. If the 20% withheld does not cover the entire federal tax liability, Karen would then have to make up the shortfall when she files her income taxes. When all is said and done, because Karen had 28% in federal withholding, 5% in state withholding and a 10% premature penalty tax, She loses almost half of her savings because she took a premature distribution.
This hypothetical illustration assumes a federal income tax rate of 28% and state income tax rate of 5%.

6. Advantages of tax-deferred growth
> 8% hypothetical rate of return*
> 28% federal income tax
> 5% state income tax
Rollover into a Tax-Deferred IRA
Taxed Distribution Invested in a Tax-Deferred Account
Taxed Distribution Invested in a Taxable Account
$503,133
($337,099 after taxes)
$286,786
($201,552 after taxes)
Initial Investment
$50,000
$28,500
$196,495
The money Karen has left over to invest also forgoes the benefit of continuing to grow on a tax-deferred basis.
This chart shows three scenarios. First let’s look at what could happen if Karen transfers or “rolls over” her account ($50,000) to an IRA, instead of taking the money in cash. The earnings from her investments are automatically put back, or reinvested into her account. In addition, as the term tax-deferred implies, her contributions and earnings are not taxed until she takes a withdrawal. This scenario is shown in light blue. Karen plans on retiring in 30 years when she is 65. If her account earns 8% each year, at age 65 her pre-tax balance would be $503,133. She would need to pay taxes when she takes withdrawals from the account. If we assume a 28% federal income tax rate and a 5% state income tax rate, Karen would have $337,099 after taxes. However it is important to note that at that time, she may be in a lower tax bracket.
Let’s look at what would have happened if Karen took a taxable distribution from her retirement plan at age 35 and invested the $28,500 (the remaining balance after the federal and state income taxes and the penalty tax). If she invests the money in a taxable account, at age 65 her balance would only be $196,495, shown in dark blue.
Even if she invests the $28,500 in a tax-deferred account she would still only have a balance of $286,786, shown in blue, which would amount to $201,552 after taxes.
As you can see from this example, Karen would have been far better off rolling her account balance to an IRA.
Please note:
Hypothetical rate used for illustrative purposes only. Not intended to project future incomes.
It assumes a 28% federal tax bracket, a 5% state income tax, and an 8% rate of return.
This example is used for illustrative purposes only. The return is not indicative of any specific investment product or class of investments and is not intended to be a projection of future values. Sales charges and administrative fees are not taken into account and would reduce the tax-deferred performance shown if they were. Actual results will vary.
Actual returns will vary depending on your specific tax rate (which may be more or less than the figures shown). A lower tax rate on capital gains and dividends would make any gains in the taxable account more favorable. You should consider your investment time horizon and tax brackets, both current and anticipated.
The following are additional considerations you should take into account. By liquidating current taxable holdings, you may be subject to capital gains or losses, which could impact your tax liability. Tax-deferred performance would be reduced by income taxes on pre-tax assets upon withdrawal. The after-tax amounts, under the assumptions used in this hypothetical example, are shown in parentheses on the chart. Tax-deferred investments can have other fees associated with them such as charges, sales charges and administrative fees that should also be taken into consideration. In addition, withdrawals from an annuity, for example, prior to age 59 1/2, may be subject to a l0% penalty tax, and a surrender charge will generally apply if the withdrawal is made during the early years of the policy.
For specific tax advice, please speak to your tax advisor.
*Hypothetical rate used for illustrative purposes only. Not intended to project future incomes. It assumes a 28% federal tax bracket, a 5% state income tax, and an 8% rate of return (not guaranteed). This example is used for illustrative purposes only. The return is not indicative of any specific investment product or class of investments and is not intended to be a projection of future values. Sales charges and administrative fees are not taken into account and would reduce the tax-deferred performance shown if they were. Actual results will vary. Actual returns will vary depending on your specific tax rate (which may be more of less than the figures shown). A lower tax rate on capital gains and dividends would make any gains in the taxable account more favorable. You should consider your investment time horizon and tax brackets, both current and anticipated. The following are additional considerations you should take into account. By liquidating current taxable holdings, you may be subject to capital gains or losses, which could impact your tax liability. Tax-deferred performance would be reduced by income taxes on pre-tax assets upon withdrawal. The after-tax amounts, under the assumptions used in this hypothetical example, are shown in parentheses on the chart. Tax-deferred investments can have other fees associated with them such as charges, sales charges, and administrative fees that should be taken into consideration. In addition, withdrawals from an annuity, for example prior to age 59 ½, may be subject to a 10% penalty tax, and a surrender charge will generally apply if the withdrawal is made during the early years of the policy. For specific tax advice, please speak to your tax advisor.

7. Will you be forced to take a distribution?
Do you have $5,000 or less in your retirement plan?
If you do decide to keep the money in your former employer’s plan, you will want to make sure to track your balance. If your vested account balance, less any rollover source assets, falls to $5,000 or less, your plan administrator may force you out of the plan. This $5,000 cash-limit is plan specific. For example, some plans have a limit of $3,500, while others may not have a cash-out limit.
If your non-rollover source balance is $5,000 or less, but greater than $1,000, then the assets are rolled over to an IRA. If the non-rollover source balance is $1,000 or less, then your retirement savings will be sent to you, minus a mandatory 20% federal income tax withholding amount, unless you elect a direct rollover to an IRA or your new employer’s plan. Remember that taking a distribution in cash will cause tax liability and possible premature withdrawal penalty tax taxes.
These are just some things you may want to keep in mind when evaluating your options.

8. Leave your savings in your current plan
Advantages
Continued tax-deferred potential growth
Delay paying income taxes and avoid possible early withdrawal penalties
Little or no paperwork
Potential for special penalty tax- free distributions1
Assets may continue to receive protection from creditors
Potential for investment management fees that are lower than in an IRA
May have access to funds through plan loans
Disadvantages
Limited investment options
Potential limits on withdrawals and exchanges between investments
Entire plan is subject to the former employer’s discretion (e.g., investment changes, blackouts, and restrictions)
Limited withdrawal options for your beneficiaries
May be difficult to maintain a cohesive retirement planning strategy if assets are in multiple locations
Your next option is to leave your retirement savings in your current plan. This will allow you continued tax-deferred potential growth, as you are avoiding current income tax, and any early withdrawal penalties. There is generally little or no paperwork required to implement this choice. Keeping the assets in your current plan also may potentially allow you to take advantage of special penalty tax-free distributions, if you separated from employment in the year you reach age 55 or older. Additionally, assets may continue to receive protection from creditors and there is the potential for investment management fees that are lower than in an IRA
However, there are several disadvantages. You only have access to the investment choices offered by your plan, and your plan can change these at any time. You are also restricted by your plan’s provisions for withdrawals and investment exchanges. In fact, the entire plan is subject to the former employer’s discretion (e.g., investment changes, blackouts, and restrictions). You must follow the plan’s rules, even though you are no longer an employee.
In addition, you may also be limiting the withdrawal options available to your beneficiaries. This is critical when you are naming someone other than a spouse as a beneficiary. In most cases, the plan will require the non-spouse beneficiary to take a complete distribution rather than allowing them to take payments over their life expectancy. As of 2010, plans must allow non-spouse beneficiaries to transfer their assets directly to an inherited IRA which will allow you to take payments over your life expectancy.
It may also be difficult to maintain a cohesive retirement planning strategy if your assets are in multiple locations.
There are ways for you to get the same tax benefits, but without all of the restrictions. We will take a look at this in a few moments.
1. Must have separated from employment in the year you reach age 55 or older.

9. Rollover to new employer’s plan*
Advantages
Continued tax-deferred potential growth
Avoid paying income taxes and possible early withdrawal penalties
Assets may continue to receive protection from creditors
Potential for investment management fees that are lower than in an IRA
Possible loan provision
RMDs can be delayed until separation from service1
May have access to funds through plan loans
Disadvantages
Limited investment options
Potential limits on withdrawals and exchanges between investments
Entire plan is subject to the employer’s discretion (e.g., investment changes, blackouts, and restrictions)
Limited distribution options for your beneficiaries
May be difficult to maintain a cohesive planning strategy if assets are in multiple locations
Your third option is to roll your money to your new employer’s plan. Moving your retirement savings to your new employer’s plan has some of the same advantages and disadvantages as keeping the money in your previous employer’s plan. An additional benefit may be the ability to take a loan. Also after taking the current year’s required minimum distribution (RMD) prior to the rollover, RMDs from the assets rolled into the new employer’s plan can be delayed until separation from service from the new employer.
*The new employers plan may or may not allow for a roll over into the plan
1After taking the current year’s required minimum distribution (RMD) prior to the rollover. Permissible for employees’ who are less than 5% owner.

10. Rollover to an IRA Advantages Disadvantage
Continued tax-deferred potential growth
Avoid paying income taxes and possible early withdrawal penalties
Larger selection of investment choices
Possible withdrawal options that may not be available from your employer-sponsored retirement plan
Certain distribution penalty tax exceptions available only with IRAs
Possible conversion to a Roth IRA
Potential for increased options for beneficiaries
More likely to work with financial professional
Disadvantage
Loans are not available from IRAs
Possible decreased protection of assets from creditors
Your fourth option is to rollover your distribution directly to an IRA. If you want to keep your retirement savings potentially growing tax-deferred and avoid paying taxes and possible penalties, an IRA rollover is an option to consider.
Loans are not available from IRAs and there is the possible decreased protection of assets from creditors.
However there are numerous advantages. Not only will you have the opportunity for continued tax-deferred potential growth, but generally you’ll have more investment options than in a typical employer plan.
In fact, you can think of an IRA rollover as a kind of personal retirement plan. An IRA allows you to control how your money is invested, and avoid all taxation while your retirement savings remain in the account. An IRA may be able to offer you withdrawal options, such as periodic or partial withdrawals, that may not be offered by your employer-sponsored retirement plan.
IRAs also offer distribution penalty tax exceptions for qualified higher education expenses and for first time home buyers which are not available to retirement plan participants. You may even be eligible to convert your IRA to a Roth IRA. In addition, beneficiaries generally have more options in IRAs than qualified plans. These will all be discussed in detail later.
Finally, with an IRA, you have a greater likelihood of working with a financial professional versus a retirement plan. A financial professional can assist an IRA owner with asset allocation, distribution planning, and retirement income strategies. Many employer-sponsored retirement plans do not offer this beneficial service.

11. What can you rollover to an IRA?
You may be able to rollover account balances from most retirement plans:
401(k) plans – For Profit Companies
Money Purchase plans
Profit-Sharing plans
Simplified Employee Pension plans (SEPs) – Small Businesses
403(b) plans – Non-profit Companies
457(b) plans (governmental only) – Local Governments
Pension plans
Other IRAs
Note to presenter: All IRAs offered by New York Life and its affiliates will accept after-tax rollovers. Please note that the after-tax portion will not be tracked by New York Life.
There is a good amount of portability of retirement plans. This means that you have fewer restrictions and greater freedom on the types of plans that can be combined. In addition to being able to roll over an account balance from a 401(k) or 403(b) plan to an IRA, the tax laws allow you to roll over retirement assets from governmental 457(b) plans and most other retirement plans into an IRA.
In most cases, your retirement plan will have only pre-tax contributions. However, some plans do allow for after-tax contributions as well. And after-tax money that has been contributed to your qualified plan is also eligible for rollover. These laws make the rollover possible; they do not mandate it. You may also want to speak with a tax advisor to see if a rollover of your after-tax contributions is the most advantageous option for you.
Beginning 1/1/15, you can make only one indirect (i.e., 60 day) IRA rollover in any 12-month period, regardless of the number or types of IRAs you own (see IRS Announcement ); however, you may continue to make an unlimited number of direct trustee-to-trustee transfers (transfers directly
between IRAs) as well as unlimited rollovers from traditional IRAs to Roth IRAs. Please consult your tax advisor prior to effecting a rollover.

12. Benefits of IRA consolidation
Simplified tracking
Less hassle and paperwork
A clearer financial picture
Retirement planning strategy
Retirement income strategy
Eliminate multiple custodial fees
Easy-to-calculate distributions
So now that you know what types of retirement plans may be rolled over to an IRA, you should also know the benefits of account consolidation. By consolidating your assets to one place, your retirement plan information and updates will appear in a single statement from one company. This will give you a unified picture of your retirement savings. It’s easier to monitor your progress, contributions, and any potential investment results when your money is all in one place.
Having your retirement assets in one place may also help to keep you organized and give you a clearer picture of any earnings and results. It can be extremely difficult to maintain an overall retirement planning strategy that meets your needs when your assets are held at several places. For example, a few years ago you might have invested for aggressive growth, yet today you may prefer a more conservative approach. Having the money you’ve accumulated for retirement in a single location can facilitate maintaining a cohesive investment strategy that reflects your current goals, timing, and risk tolerance. Additionally, when you enter retirement, you may be able to more effectively implement a retirement income strategy if all of your assets are in a single account.
Each of your current plans may be charging maintenance, custodial, or annual fees. You can stop paying duplicate fees by consolidating all of your accounts to one IRA.
When you reach age 70 1/2 you generally must begin taking required minimum distributions (RMDs) from your IRA and possibly your other retirement accounts. It’s typically easier to calculate and take withdrawals from a single account. (Please note that Roth IRA owners are not subject to required lifetime minimum distributions. In addition for individuals who are still employed, they may not be required to take withdrawals from that employer’s qualified plan if they are less than 5% owner.)
In addition to being able to roll over various types of retirement plans to an IRA, you may also have the flexibility of converting your IRA to a Roth IRA. Let’s take a look.

13. Beneficiary Advantages
Have you stopped to think about what will happen if the account gets paid out to your beneficiaries? As I mentioned before, an IRA may allow you to pass along more savings to your loved ones.
Many people leave their retirement assets in a former employer’s retirement plan without thinking of the tax implications for their beneficiaries. Your beneficiaries can possibly be afforded many tax benefits if you implement some estate planning strategies.
One of the biggest advantages to rolling over your former employer’s retirement plan to an IRA is the ability for your beneficiaries to “stretch” the payments over their life time. Let’s take a look at a diagram illustrating how stretching IRA withdrawals works.
The original account owner passes away, and the account is inherited by his or her spouse who can then roll it into their own IRA. The spouse can then name his or her own beneficiary to the account. Let’s assume that they name their child or grandchild. The spouse then later passes away, and the account is subsequently inherited by the spouse’s child or grandchild. The child or grandchild may then take required distributions based upon his or her life expectancy. Since the child or grandchild is much younger than the spouse, their life expectancy will be much longer, and thus allowed to grow for a longer amount of time. “Stretching” the payments provides an alternative to taking the money all at once and facing a huge tax liability which can erode the legacy of the IRA. Please consult with your tax and/or legal advisors for more information before you accept this strategy as neither New York Life nor its affiliates or representatives provide tax or legal advice.
Stretching an IRA allows the money to continue to potentially grow tax-deferred beyond your lifetime, while also providing the opportunity for potential growth of your future generation’s inheritances.

14. Spousal Beneficiary Options
1.) Roll into their own IRA and treat it as their own
2.) Roll into an Inherited IRA and take RMD’s based on when their deceased spouse would have turned 70 ½

15. Non-Spousal Beneficiary Options
Take money in a lump sum and pay taxes. There is no 10% penalty
If the deceased owner was under 70 ½ :
1.) Roll into Inherited IRA and take RMD’s
2.) Distribute account over 5 years
If the deceased owner was over 70 ½:

16. The Roth IRA What is the Roth IRA?
Will I be eligible to convert to a Roth IRA?
How do I roll my retirement plan savings to a Roth IRA?
The difference between a Roth and a Traditional IRA involves the treatment of contributions and withdrawals. A Traditional IRA offers the potential for tax deductible contributions and tax-deferred earnings, whereas the Roth IRA allows for the opportunity to make tax-free withdrawals.
With a Roth IRA, your contributions are not tax deductible, but your withdrawals may be tax free. As long as you have had a Roth IRA for at least five years and you either reach age 59 ½, become disabled, need the money for up to $10,000 of expenses on a first-time home purchase, you may be eligible for the tax-free withdrawal.
You also may be able to convert your Traditional IRA to a Roth IRA regardless of your modified adjusted gross income. Tax laws permit a direct rollover from your retirement plan into a Roth IRA. Since there are tax implications to these actions, please remember to check with your tax advisor before you make your decision.

17. Additional Distribution Information

18. What if you already took a distribution?
Replace income tax withholding.
Roll over to an IRA.
Must be done within 60 days.
Even if you have already taken a distribution from your retirement account, you can still roll over all, or part of it to an IRA. If you decide to do this, you must complete the rollover within 60 days of receiving the payment. The portion of your payment that is rolled over will not be taxed until you take it out of the IRA. You may choose to roll over 100% of the distribution, including any amount equal to that withheld.
However, in order to accomplish this, you must have other funds available to replace the amounts that were already withheld. If you do not have these funds available, and only roll over the amount that you received, you will be taxed on any amounts that were initially withheld. In addition, you may also be responsible for a 10% penalty tax on these amounts if you are under the age of 59 ½ and not eligible for any exceptions.
This method is known as an indirect rollover. Keep in mind that this is not the easiest way to complete a rollover. Generally, doing a direct rollover is a lot less complicated.

19. Special IRA penalty tax exceptions
First-time home purchases
Up to $10,000
First-time homebuyers (or if there has been at least two years since previous home ownership)
Qualified education expenses for qualified individuals
Another advantage of an IRA is the fact that there are special penalty tax exceptions available. Account owners who are purchasing their first home may withdraw up to a lifetime maximum of $10,000 from their IRA without paying a 10% penalty tax. This exception may also apply to previous homeowners if there has been at least two years since previous home ownership. These distributions can be made for a home purchase by the account owner, his or her spouse, children or grandchildren.
You may also withdraw IRA assets on a penalty tax-free basis to pay for higher education expenses for yourself, your children or grandchildren. Qualifying expenses include tuition, fees, and books for both undergraduate and graduate study. The maximum amount of such a withdrawal is limited to the cost of the qualified higher education expenses, reduced by the amounts of any scholarships, or higher educational assistance. If you have questions regarding the tax implications of these withdrawal options, please consult your tax advisor.

20. Exceptions to the 10% penalty tax
Separation from employment after reaching age 55
Substantially equal periodic payments based on life expectancy
If you separate from employment during or after the year in which you reach age 55, you may be able to take a distribution of your retirement savings, and avoid the 10% early withdrawal penalty tax. This does not apply to traditional IRAs or SEPs. This is only relevant to employer-sponsored pension or profit-sharing plans, such as a 403(b) or 401(k). So, as long as you separate from service in the year you reach age 55 or later, you can take advantage of this exception. Keep in mind that if you separate from service before the year in which you will be turning 55, even if you wait until 55 to take your distribution, you will not qualify for the exception. In order for a qualified plan participant to be eligible for the SEPP exception, the payments must start after separation from service.
Another exception to the 10% penalty tax is distributions in the form of substantially equal periodic payments. These payments will not be subject to the 10% penalty tax, although they will still be subject to regular income tax.
There are several requirements that must be met in order to qualify, and remain qualified, for this exception.
Distributions must be paid periodically. Payments must be made on at least an annual basis, but can be made more frequently such as monthly or quarterly. Distributions must be calculated so they will be substantially equal over your lifetime. There are a few ways to do the calculations, so be sure that your method is one that is approved by the IRS. You also cannot modify the distributions once they begin, until you reach the later of either age 59 ½ or the completion of five years of the substantially equal periodic payments. The only exceptions to this are generally in the case of death or disability, however the IRS may offer a one-time change under certain circumstances.
Before deciding if these special withdrawal options are right for you, please consult your tax advisor.

21. Required Minimum Distributions (RMDs)*
Generally must begin by age 70 ½
Calculated by dividing December 31st balance by applicable life expectancy factor
50% excise tax if distribution is not taken
We have been discussing your options regarding your retirement plan distributions. There comes a time when you no longer have a choice about delaying your distribution. This mandated distribution is called the required minimum distribution, or RMD. Generally this distribution must be taken by the end of the calendar year for which it is required. However, you have the option to delay your initial distribution until April 1st following the year in which you reach age 70 ½.
For certain employer sponsored retirement plans such as a 401(k), 403(b), or Governmental 457(b) plan, you may be permitted to delay your initial distribution to an even later date, provided you are still employed with the employer sponsoring the retirement plan. In this case, the required beginning date can be delayed until April 1st following the year in which you separate from service.
With a Traditional IRA, or a 5% owner of a company in a qualified plan, employment status is not taken into account, but you do still have the option of delaying the distribution until April 1st following the year you turn 70 ½. If you choose to delay the initial distribution, you must make sure that you take two distributions the first year—the delayed distribution plus the distribution required for that calendar year. After the first year, you will just need to take the RMD by December 31, every year.
The amount that you are required to take is calculated by dividing your account balance at the close of business on December 31 of the preceding year by the applicable life expectancy divisor. Everyone uses the same IRS table to determine their divisor. The only exception to this is for those individuals who have a spouse more than 10 years younger than themselves.
The RMD cannot be rolled over, the money must be paid out to you. And failure to take these minimum payments can be quite costly. There is a 50% excise tax imposed on any amounts required to be paid out, but not distributed. Therefore, it is important to be sure to begin and continue taking these distributions on time.
*An RMD is required from a Traditional IRA when the client reaches the age of Clients who own Roth IRAs are not subject to the lifetime RMD rules. Roth IRAs are subject to RMDs after the death of the account owner.

22. Materials

23. Starting The Conversation
Try asking these questions to see if a rollover might be right for your prospect
Try asking these questions to see if a rollover might be right for your prospect. This questionaire is available on Agency Portal.
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24. Your team is behind you! Contact: 1 800 NYLIFE-8 Service: Option 1
Sales Desk: Option 3
Advanced Income Solutions:
Joe Baumgartner
Casey O’Donnell
As you can see we’ve covered a lot of information about this very important topic. The choices you make will directly impact your future. Let’s take a moment to answer any questions you may have or go over anything you’d like to review.